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June 5, 2003

His Excellency Dr. Thaksin Shinawatra
Prime Minister of Thailand

Your Excellency President Arroyo,
Your Excellency Prime Minister Mahathir,
Mr. Ryoki Sugita,
Excellencies
Distinguished Guests,

Thank you very much, Mr. Sugita, for your kind words of introduction. Please allow me, first of all, to express my sincere appreciation to the Nihon Keizai Shimbun for inviting me to participate in its 9th international conference on the Future of Asia here in Tokyo. I am very confident that, with a gathering of such distinguished guests, and through the exchange of views and experiences, the conference will provide a useful forum to enhance the strength and the future role of Asia for the benefit of all its people.

Excellencies
Distinguished Guests,

History has shown the rise of great Asian civilizations. For thousands of years this continent was the cradle of rich resources, culture, wisdom, philosophy, scholarly and artistic values, skills and talents, which were learned and passed over from generation to generation, and have even influenced some of the western civilization. From the Middle East to the Far East, as we are called by the "Far West", empires rose and flourished. Some were glorious and long-lasting. Some were contracted and partitioned among a large number of rival rulers. But no one could ever deny the legacy that the Asian civilization has bequeathed the world. Asia has sowed the seeds of religion, philosophy, culture and social structure, which have contributed towards modern civilization.

It is true that while our roots may define our identity, we should not be prisoners of the past. But the contemporary history of Asia, both with and without external intervention elements, has witnessed numerous civil and inter-state wars, leaving many of our people in a conflict-torn state, unable to benefit from the richness of our culture. Popular history and geography, as taught in schools, frequently perpetuate discord and animosity among our peoples of different races. Often, we, in Asia, are competing against each other, not only to our own disadvantage, but also to the advantage of others. This is regrettable but is actually taking place in many parts of our continent and has been an obstacle to Asian development and done no justice to our long history of civilization.

It is perhaps the supreme irony that most of what the world accepts as the greatest symbols of human civilization - the Seven Wonders of the World - are located in Asia. And yet, the countries where these Wonders of the World are situated still have poverty as the major enemy of their progress.

While Asian civilization should have created the inner strength for prosperity and the well-being of the peoples and the continent of Asia, in reality, that is still far from the case. If the future of Asia and the genesis of the new Asian order are to ensure greater benefit and prosperity for its people, then this is the time to reappraise the perception of ourselves.

Distinguished Guests,
Ladies and Gentlemen,

The present is certainly not the end of the historical process. And the future is much more than the sum of what went before. We have all learned that if the patterns of the past are allowed to simply reassert themselves, then we might only repeat the sorrows of history. Countries must learn to regard each other differently. They must create conditions, conducive to new undertakings, new partnerships, and peace for the future. In reaping the benefits of the past for the better prospects of the future, this is the time for transformation and changes in Asia. This is the time for Asia to reach out for the new horizons of partnership, based on our common strength and diversity, setting aside any root causes of our weaknesses. This continent is strikingly diverse. I believe that Asia needs new patterns of openness and cooperation that will promote confidence and respect for diversity while maintaining the Asian values. This transformation and changes of perception must touch the basic concepts of the security of nations, the prosperity of peoples, and the responsibilities of the present generation to all generations that follow. I am one of those who accept change, not only because change is inevitable but because it is indispensable. And I do believe that only change backed by political, economic and social freedom can endure.

Looking back at the past, it is clear that the Asian financial crisis of 1997 was one of the most devastating. Millions of workers lost their jobs and their families were dragged into poverty. The fact that the economic crisis spread rapidly in a chain reaction points to the interdependence of Asian countries and, therefore, the need for Asian countries to unite and cooperate with one another on an Asia-wide basis. Six years on, some of us may have recovered economically a little faster than others. But whatever the speed of recovery, all of us have no choice but to turn to the same direction: to look forward to the future and what it holds for Asia.

Distinguished Guests,
Ladies and Gentlemen,

There are many lessons we have learned from the teachings of our great Asian leaders and philosophers in the past. "Self-reliance while living in harmony with our interdependent society" is one. "Better to teach a man to fish than to give him handouts" is another. I have allowed myself, on many occasions, to let the wisdom of the teachings of some of our own Asian philosophy guide my vision and my policies, both in domestic and foreign affairs. I am more than encouraged that we in Asia can draw so much from our culture and civilization, and make use of our rich diversity to reinvent and rebuild our Asian economies.

Looking into the future, what is on offer for Asia? Asia can be the best place to produce goods and commodities for the basic necessities in life. Food, agro-industry, garments, health care, and other industries such as automobiles, can be undertaken both for domestic consumption and for exports. While all of us are conscious of maximizing our earnings from exports to our trade partners outside the region, we must not overlook the fact that the best market for us is our own Asian intra-market. We should not forget that Asia has a massive production capacity and enormous potential markets for consumer goods and services. Asia is the world's major supplier of food products and agro-business and has the potential to be the world's food reserve center. It has some of the world's busiest airports and the world's biggest seaports. The continent is the world's biggest source of global fuel. Its total population accounts for over 60 percent of the world population. Asian exports constitute over one third of total world trade. Asian international reserves account for over 75 percent of the total international reserves of all developing countries. As you can see, Asia is definitely the number one continent in term of quantities.

It is all too clear to me that the maturity of Asian trade will provide greater options to the rest of the world for alternative wealth creation and consumption. The maturity of Asia in creating sophisticated original products and services will drive Asian trade with the rest of the world. It will provide parallel trade opportunities that the world has never known before.

In the past, the trading of products and services originated from the West, but were merely reproduced in Asia. From now on, the trading of products and services must also originate in Asia, be produced in Asia, and traded in the rest of the world. Asia must not only produce mirrored products from the West, but must also craft original products with substance and innovation. It is high time that we in Asia should produce distinctive Asian products using our intellect and aesthetic skills, thereby enriching the existing choices for trade and economic relations. This would undoubtedly strengthen Asia, not only for our own region but also for the rest of the world. With China, India, Indonesia, Japan, South Korea and the rest of Asia, we have a market of more than half of the world population. To me, it is not the size of the market we need to worry about but it is the purchasing power of this domestic market that needs a lot of boosting. We have enormous potential. But the question is that of empowering.

Aware of our glorious past, conscious of our present diversity and differences, eager to see prosperity in Asia, and guided by Asia's own wisdom, I am convinced that the initiative of many Asian leaders to create the Asia Cooperation Dialogue or ACD almost exactly a year ago in Cha-Am, Thailand was an appropriate and timely strategic opportunity for the future of Asia.

From the outset, the ACD is an informal and non-institutionalized forum where Asian decision-makers can exchange views on how best we could endeavour to achieve an Asian-wide cooperation framework. The twin main goal of the ACD is to effectively cement peace and unity among Asian nations and to make the maximum use of our diversity, which is in fact, the basis of our strength. Having set aside any counter-productive and futile-to-argue issues, Asian nations can further forge strategic partnerships and synergize strengths in order to gain greater bargaining power in the international arena for their mutual benefits and prosperity. Unconventional as a framework for international cooperation, the ACD represents a new paradigm of cooperation. Being an evolving process based on the voluntary willingness and comfort level of each participant, the ACD is both a dialogue and a cooperation that takes into consideration the core values of the Asian way instead of following any existing institutionalized framework.

The ACD process brought together 18 Asian countries from the westernmost to the easternmost points of the continent. The 2002 inaugural meeting was historic because it was the first time ever where key Asian countries agreed that they need to enhance a continent-wide cooperation and create a win-win environment for Asia and its external partners. For Asia, the ACD is a "teach-a-man-to-fish" empowering process towards self-reliance, which is in harmony with the increasingly interdependent world. It is a process in which all Asian countries, whether rich or poor, large or small, can make a positive contribution to the economic progress of Asia for the future.

Propelled by its positive thinking, the ACD has become a multi-sectoral forum, supported by an incremental, evolving and inclusive process. The participants at the ACD 2002 meeting agreed that the Dialogue must be action-oriented. It was Foreign Minister Kawaguchi who wisely suggested that the ACD must strike a balance between dialogue and project components. I greatly value her contribution and totally agree with her that the ACD should avoid duplication of efforts, which are being made at other regional cooperation frameworks. Only by doing this can the ACD supply the missing link and add value to existing inter-regional groupings such as APEC and ASEM, as well as other existing sub-regional groupings.

The ACD is not a negotiation platform but a confidence-building forum. To be effective, the ACD is built on a partnership-based approach. Successful implementation of an Asia-wide cooperation requires a joint commitment by all the member countries. This can be achieved through sustained dialogues and the promotion of comfort level among participating countries. Out of the 18 participating nations, 14 ACD capitals have so far volunteered to become prime movers in 18 cooperation projects, which are conducted on a voluntary basis and designed in a participatory manner. The areas of cooperation range from energy security to poverty alleviation, from tourism to agriculture, from SMEs to science and technology. I am very pleased that Japan has decided to take a lead in the fields of Environmental Education and Strengthening the Legal Infrastructure, and will participate in every area of cooperation identified. Through the ACD process, Japan can play a leading role in building confidence and prosperity in Asia. By participating in the ACD, Japan has oriented its dynamic engagement with its Asian partners in a very positive direction.

Distinguished Guests,
Ladies and Gentlemen,

We live in a world where capitalism dominates the international economy. It is my personal conviction that real success in business cannot be achieved without appropriate financial management. Likewise, a truly successful economy, be it on a national or regional level, cannot be achieved without the implementation of supportive financial policies and instruments. When I look at our continent, I am disheartened by Asia's chronic liquidity dilemma, especially after the 1997 crisis. With the total combined international reserves amounting to over one trillion US dollars, or over half of the world's foreign exchange reserves, our continent is still suffering from a liquidity problem. Our reserves have not been used to create wealth for our population. The problem with Asia is not the fact that we do not possess enough capital to create wealth. But rather, we do not possess the instruments through which we can utilize our capital to create enough of our own wealth. Our reserves, when deposited in term of bonds in the west, have created more wealth to the western hemisphere, without contributing toward our own growth of wealth in the East.

This all brings us to the "chicken and the egg question" of which one comes first - debt instruments or wealth. If a country has no wealth, then it is not in a position to create debt instruments. At the same time, if a country has no debt instruments, it will be hard pressed to create wealth.

The middle ground of this dilemma is that we in Asia must try to manage our assets, resources and strengths in such a way that the creation of our financial instruments will serve us best. If we do not effectively manage our resources, and transform our differences into strengths, we will be forced to continue devaluing our own wealth, both directly and indirectly, through the repeated devaluation of our currencies.

It is apparent that countries which know how to value their wealth are in a position to create all kinds of financial instruments to build up their wealth. On the other hand, countries that fail to do so will not have the necessary tools to assist themselves in their wealth creation process.

In short, the new partnership in Asia will not achieve its objective if the capital and liquidity problems in Asia remain pending. The question I asked myself was what would be the appropriate financial instrument to break the vicious circle underlying this problem of liquidity? My answer is the Asian Bond.

The establishment of an Asian Bond market is a means to an end, but not an end in itself. It will greatly contribute not only to ensure the full and sustainable recovery of our economies but also to promote the adoption of best practices in Asia's capital market development. The establishment of the Asian Bond will bring about benefits to every Asian country, and Japan can use this financial instrument to explore a new relationship with the rest of Asia. During the ACD Workshop on Financial Cooperation and the Asian Bond in Bangkok only a few weeks ago, the reaction of all the participants was very positive. It should also be noted that our external partners were no less enthusiastic with regard to the concept of the Asian Bond. At the Fourth Asia-Europe Meeting, or ASEM 4, in Copenhagen last September, the leadership of the EU and Asia agreed to work towards a closer ASEM economic partnership by setting up an action-oriented Task Force to study the potential of an Asian bond market and a Eurobond market.

The time for the Asian Bond is long over due. For Asia, this instrument is a financial architecture for the world of differences. I am pleased to announce that on Monday, June 2nd, the respective 11 central banks of the participant economies have declared their intended contribution to the Asian Bond Fund. At the same time, Australia, China, Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore and Thailand agreed to join the Fund with a starting capital of 1 billion US dollars. The Thai Government approved up to 200 million US dollars from the country's foreign reserves to invest in the Asian Bond Fund. Thailand's initial investment will be 120 million US dollars. This is the way to use Asian money to create wealth in Asia. In time, the Asian Bond will not be merely beneficial to Asia but, together with the US and the Euro Bond markets, will support a more balanced and stable financial market of the world.

I hope that the ACD Foreign Ministers will take up this issue at the second ACD meeting in Chiang Mai in 2 weeks from now, and that a collective decision will be taken to give political support for the launch of the Asian Bond at the meeting.

Distinguished Guests,
Ladies and Gentlemen,

While the ACD is an empowering process, and inclusive on a continent-wide basis, individual countries must find other measures to complement the empowering of their respective economies. The FTA, be it bilateral or sub-regional, will bring about more prosperity and potential to our respective markets. When one market after another in Asia gets more prosperous, this provides greater opportunity for the rest of Asia to trade and become more prosperous too. Bilateral and sub-regional free trade arrangements are empowering measures to guarantee the future of Asia. A more prosperous China and a more prosperous India mean a more prosperous Asia as a whole, if the flow of trade with these two countries is unobstructed. It is therefore in the interests of all of us to see an increase in prosperity through trade in any of our Asian friends. The same is also true with neighbouring countries. I believe that it is to everyone's benefit if Myanmar, Laos, Cambodia and Viet Nam become more prosperous. Thailand, having swiftly recovered from the 1997 crisis much faster than many had anticipated, stands ready to be of economic assistance to our neighbours. Economic empowering of our sub-regional neighbours will take priority in our foreign policy. An economically strong and politically stable Indochina is important for the future of Asia.

The Future of Asia also requires confidence-building in terms of peace and security. Investment, trade and tourism are dependent on conflict management and the ability to accommodate security issues in the region. The ASEAN Regional Forum or ARF, comprising the ASEAN members and many allies both within and outside Asia, has played the role of confidence building in the ASEAN region. But so far, I do not believe that confidence building alone should be the role of ARF. ARF should be encouraged to be a more active security forum in Asia, especially through the ARF's Chair. Now with the enhanced role of the chair of ARF, the ARF will be able to play its part in preventive diplomacy in addition to confidence-building in the Asian region.

Distinguished Guests,
Ladies and Gentlemen,

The ACD is only 11 months old but has already served to convince many Asian leaders of the vital importance for Asian countries to work collectively in order to set the ground for lasting growth and social stability, which would benefit both Asia and the international community at large. The ACD will not become an exclusive club for the privilege of the few, but an inclusive club for the benefit of all. Thanks to the rich diversity and dynamism of our continent, the ACD will be able to offer a new Asia, which is strong and vibrant: a peaceful and prosperous continent for this generation and beyond.

Some 15 years ago, the cry went up that Asians would dominate the third Millennium. The events of the last few years may have cast some doubt. But in all likelihood, I still have every confidence that Asia will do very well in the coming decade. The future of Asia will be bright if its prudent and creative policymakers seek to promote constructive dialogue and peaceful economic exchange. The future of Asia will be bright if Asian leaders put all effort to work together to turn Asia into the world's biggest growth area. The future of Asia will be bright if Asian leaders strive to maintain a stable and stabilizing balance of international power.

I am confident in the inner strength of Asia. I am confident in the Asian values and the benefits of the ACD process. I am confident in all of the potential already pertained in ourselves in Asia. I am confident that if Asia is properly empowered, the next decade will become the decade of Asia. And I am, most certainly, confident in the better future of Asia for its people and their children.

Thank you very much.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.